Councils should be able to retain Right to Buy receipts

Central and local government need to work together to provide local areas with the powers to replace every council home sold, with councils retaining Right to Buy receipts, the Local Government Association (LGA) has said.

The association also wants councils to be freed from restrictions on the ability to borrow to fund new home building.

In its submission to the Treasury in advance of the Autumn Statement on 23 November, the association said local councils need to be given the powers to replace every council home that is sold “as quickly as possible”. In return, councils should be able to “retain up to 100 per cent of Right to Buy receipts and receipts from the sale of high-value council houses, which should become voluntary”.

Currently, councils are allowed to keep 30 per cent of receipts from homes sold. However, if they were able to replace every home sold through Right to Buy, the association said they would be able to build an additional 60,000 homes up to 2020.

It also said an open discussion is required on the options that would free council from restriction on their borrowing to build homes, such as removing Housing Revenue Account borrowing from contributing towards national public debt.

“This would allow local government to rapidly contribute new homes in the market, meet a wide range of local need and generate significant medium and long-term financial returns for public services,” says the submission.

The association also calls for a shift towards tenure flexibility. While starter homes could be an “important part of the local housing market, councils could maintain flexibility to ensure that the “right mix of affordable housing products through Section 106 Agreements”.

The submission also calls for the principle of devolution to be applied to devolving funding for transport bodies and establish a ‘duty to cooperate’ so that “Highways England and National Rail engage with councils and account for the impact of their spending on local areas”.